Zinc production reached 81,000 tons, an 8% increase compared to 1Q23.
Adjusted EBITDA was US$ 72 million in the period, affected by lower metal prices in the international market.
The company continues to develop its ESG practices and registered its carbon emissions on “LMEpassport”, the London Metal Exchange platform, an achievement that positions Nexa as a global leader in carbon reduction in the zinc industry.
Nexa Resources, one of the world’s largest zinc producers, ended the second quarter of 2023 with net revenue of US$ 627 million, a 6% decrease compared to the first three months of the year. This performance was mainly due to lower metal prices on the London Metal Exchange (LME), partially offset by higher mining production and metal sales volumes.
Zinc production reached 81,000 tons, an increase of 8% compared to the first three months of the year, mainly due to the resumption of the Cerro Lindo mine in Peru after the heavy rainfall in mid-March, as well as to the progress of ramp-up at Aripuanã mine, located in the state of Mato Grosso, Brazil. Additionally, the Company recorded a production of 9,000 tons of copper, 42% higher than in 1Q23. Lead production totaled 16,000 tons, an increase of 5% in the quarter over quarter. During the period, Nexa produced 2.6 million ounces of silver (+12%) and 6,800 ounces of gold (+5%) compared to the previous quarter.
Metal sales (zinc metal and zinc oxide – products with higher added value) totaled 149 thousand tons, 4% higher than in the previous quarter. Increased sales were driven by higher production volume and by the sales strategy in line with working capital achievements.
“The persistent U.S. inflation in some key sectors, coupled with concerns about the Chinese economy put downward pressure on base metal prices, with zinc prices falling 19% and copper 5% compared to 1Q23,” stated Ignacio Rosado, Nexa CEO. “Although we expect LME prices to remain under pressure, we continue committed to financial discipline. From an operational standpoint, we have made significant progress in the completion of the ramp-up phase at the Aripuanã, which will contribute to enhancing our operational profile and cash-generation capacity of the Company. It is worth noting that in the second quarter production and capacity utilization at Aripuanã increased, while the quality of concentrates also improved. The zinc concentrate is being processed by our smelters in Brazil, and the copper concentrate is being shipped to an off-taker. In addition, lead concentrates are also being sold. We will continue to focus on safety, productivity, and costs control, in order to create value for all of our stakeholders, always prioritizing our ESG commitments ,” concludes Mr. Rosado.
In the period reported, adjusted EBITDA totaled US$ 72 million, a 46% decrease compared to the first quarter of this year, reflecting a volatile macroeconomic environment, and lower LME metal prices. In the quarter, Nexa’s adjusted net income reached US$ 12 million, totaling US$ 15 million in the first semester of 2023.
Performance in the semester
In the first six months of the year, Nexa achieved a net revenue of US$ 1.3 billion, down 17% compared to the same period in 2022. In the first semester, zinc production rose by 7%, mainly explained by an increase in the treated ore volume, as well as to the start-up of Aripuanã mine.
For copper, there was a drop of 10%, due to lower production at the Cerro Lindo mine in Peru. On the other hand, lead production increased 17%, compared to the first semester of 2022.
Lastly, adjusted EBTIDA totaled US$ 205 million, a 61% decrease compared to the first six months of 2022.
US$ 60 million investment in Capex this year
In the second quarter of 2023, Nexa invested US$ 60 million, totaling US$ 116 million in the first semester of year. All the investment was classified as sustaining, which includes capex to sustain operations, health, safety and environmental initiatives and mine development. In the same quarter, US$ 21 million was also invested to project exploration and evaluation, totaling US$ 42 million in the first six months of 2023.
Faced with the challenging scenario of lower prices, the Company has been implementing initiatives to optimize capital allocation, which include reducing operating costs, optimizing working capital, and thoroughly reviewing the intensity of investments for the remainder of the year.
Nexa advances its ESG strategy
In line with the commitment to decarbonize its value chain, in April 2023, Nexa started operating 25% of its vehicle fleets carrying materials at mines in Peru using natural gas instead of diesel. This first stage will allow for an annual reduction of roughly 23 tons of CO2.
Also, the company obtained authorization from the Regional Superintendence for the Environment in the State of Minas Gerais (SEMAD) to use biofuel to replace fossil fuels, used in the furnaces for operation of zinc oxide at Três Marias. By year’s end, the target is to expand the use of biofuel to 12 furnaces of the unit.
Additionally, in July 2023, Nexa registered its carbon emissions on the “LMEpassport,” the London Metal Exchange’s digital platform that promotes sustainability and transparency across the base metals sector. Nexa’s zinc production has one of the smallest carbon footprints recorded in the sector, with an emission intensity of 0.36 tons of CO2 equivalent (scopes 1 and 2), according to the GHG protocol methodology, placing Nexa as a global leader in carbon reduction within the zinc industry.
Advancement of operations at the Aripuanã mine (Brazil)
Operations at the Aripuanã mine, in the state of Mato Grosso (MT), Brazil, remain focused on constantly increasing the plant’s production rate and reliability of assets, as well as on improving grades and the quality of concentrates.
In this regard, at the end of the second quarter of the year, the plant reached 76% of nameplate capacity, increasing from an average utilization rate in the second quarter of year of 66%. Next quarter, nameplate capacity is expected to reach 80 to 85%.
Atacocha mine resumes operations
The Atacocha San Gerardo open pit mine in Peru has resumed its operations at normal capacity utilization rates. Protest activities by the community ceased and access to the mine was released.
The estimated zinc production loss of 0.9kt is expected to be recovered in the upcoming months. As previously disclosed, the 2023 production guidance remains unchanged.
Nexa remains committed to the social development of its host communities and will continue to pursue an active dialogue with the local community and its members.
Nexa Resources is one of the world’s largest producers of zinc, also producing copper and lead. It has over 65 years of experience in the mining and smelter segments, with operations located in Brazil and Peru and office in Luxembourg, supplying its products to every continent on the planet. Its employees work every day focused on building the mining that changes with the world, to be increasingly sustainable and innovative, with the best safety practices and respect for people and the environment. Since 2017, its shares of stock have been traded on the New York Stock Exchange, and its majority shareholder is Votorantim S.A.
For more information, visit www.nexaresources.com